Katie took all of my money. And then I went broke.
But that’s what friends are for.
Tens years later, yesterday, we went to an advance screening of Louis CK’s new movie, “I Love You, Daddy” coming out on November 17.
Louis stars, wrote, directors, produces, etc the movie. He filmed it as secretly as possible.
Why did Katie O’Hagan (in photo taken at the screening yesterday. We had the whole theater) do such a horrible thing to me? She literally took all my money.
She sold me her house at the very top of the housing market over a decade ago.
And then I sold (or maybe it was seized, one or the other..I forget), a few years later.
As usual, she was smart and I was stupid.
That’s the last time I will ever buy a house. Particularly from her.
1) RENT VS OWN:
Everyone says: When you rent you throw your money down the toilet.
No you don’t. You SAVE all the money you would have had to put on down payments, lawyer fees, agent fees, insurance fees, initial maintenance, etc etc etc.
That money you save can be used for income or entrepreneurial opportunities that historically have much higher returns than real estate (which is only 0.2% per year after inflation over the past century during the biggest expansion ever).
2) UNPLANNED MAINTENANCE
You save on future unplanned maintenance (which is NEVER baked into rent like people say).
For instance, in the house I bought from Katie there was a tree that was dying and eventually had to be cut down.
And all the electric wiring had to be re-done. And on and on. Nobody could have planned for that.
Unless Katie knew! Hmmm…..
Your cash is liquid as opposed to putting it all in an illiquid investment like a house which you can never sell (as I well know) EXACTLY when you most need it.
4) DEBT OR NO DEBT
For many people, buying a house requires taking on an enormous amount of debt.
Why take on so much debt when you can rent and not take on any debt?
Fannie Mae, the largest mortgage lender ever used the phrase “The American Dream” in their biggest marketing campaigns.
They knew how to manipulate everyone into borrowing. “It’s the American Dream!”
No it isn’t.
5) DO YOU EVER REALLY OWN?
Do you ever “own” your home when you buy?
The banks own, and the government owns. And, in last place, you own. A tiny piece.
If you skip property taxes for a few months, (or don’t call the zoning board about that deck you just built), then the city can come in and take your house. BOOM!
6) MOBILITY INCREASES INCOME AND WEALTH
Lack of mobility (i.e. you can’t easily move because now you “own”) reduces your long-term income opportunities.
Anyway. Should you ever buy a home?
Sure. A lot of people like to have roots.
You can paint your walls if you buy a home. Like yellow. Or blue. Or, for the crayola-minded – burnt ember.
Some people like to know they can stay in a place for a long time. The argument is: this is good for kids.
I don’t think kids care. But adults care. And that’s fine. We all make our choices as to what is important to us.
Buying Experiences is greater than buying Things.
You look forward to an experience, have an experience, remember an experience. Experiences last forever. Both good and bad ones.
Things get forgotten.
But other people are different.
A lot of people find interesting ways to invest in real estate. If you can buy cheap and sell high (like Katie) then do it. But most people can’t.
Some people don’t need to take on so much leverage. Then maybe it’s ok to buy also if prices are right.
I made all of the mistakes.
Was it because I was bad at real estate? Yeah.
BUT MORE IMPORTANT:
I wasn’t treating myself well. My relationships were going poorly.
The most important career and life decision you can make is who you are close to. The five people you choose to be around.
Who do you love.
Be close to the people who will support your successes. Those are the ONLY ones that count. Because then success will build on success.
I wasn’t in good health all the time. I stopped writing books for awhile. I stopped being creative.
I thought I was invincible because I had just sold a company.
And THEN I bought a house.
And THEN I made non-stop bad decisions for a long time.
And THEN I went broke.
Katie is one of the best realist painters I know. She’s painted my daughter, Mollie. Here’s a link to her paintings.
Check it out.
Maybe one day I’ll go broke buying one of them. She’s that good.
Just because someone causes you to go broke doesn’t mean you can’t see a Louis CK movie with them ten years later.
There’s no formula to meet the people who we are close with.
This is what makes life so interesting.
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